My colleagues have asked for a second round and we are going to do that. I hope people will help us move this along. I will reserve any comments i have to make. Senator lets go back, if we mnuchin. Were cut for the while 2 percent that sure looks to me like what we agree is going to be called rule, absolute tax break for the wealthy. You agree with that . Again, we want, to work on and imis very specific asking you for a reason. I dont want to have to repeat it. For the topat cuts 2 while eliminating credit for those who are low and middle income. Doesnt that violate the mnuchin rule . Mr. Mnuchin we need to look at the overall tax plan and as i said, the primary objective is to deliver a middleincome taxcut and tax simplification on the high end. Senator you are already fudging on this commitment that you made to the American People, that he wouldnt give an absolute tax break to welltodo people. The reason i am asking this is because this is exactly what aca repeal was all about in the last congress. And every single republican up here voted for it. So i hope you will think this over, but this is exactly what troubles me. We have two tax systems in america. You were nudging our way, saying maybe you wouldnt give a break to welltodo i am asking about a specific situation. We will have to see. Let me turn to a second area that workingclass people care a lot about. It involves their purchasing power. There are a lot of questions about the 3540 5 border tax that the president elect is doing fair amount of tweaking g about. Tweetin can you tell the American People what products would be subject to this tax . I am not interested in interested in the complicated issues about the value of the dollar. That americans want to know what products would be subject . Workingclass people want to know, is gas going to be part of this . Give me your response. Any products that will be resent exempt . Mr. Mnuchin thank you, that is an important issue. Week, theat this president elect came out and suggested he had concerns about the house gop border adjusted tax. Part of it is the complexities around it and part of it is i am not talking about what the house is doing with border adjustment. I want to hear about the order tax the president has been talking about. Suggestedn he hasnt a border tax. What he suggested is that for Certain Companies that move jobs , that there may be repercussions to that. He has not suggested in any way an acrosstheboard 35 border tax. If anything, quite the contrary. As you said, he has concerned about the impact to gasoline and others. Products wouldt be off the table for purposes of what i call border tax, and you want to say is kind of something else. What products that workingclass people by will be exempt . He haschin what referred to as a border tax he has referred to a small number of companies that have moved their jobs or are moving putting products back into United States and taxing them. He has in no way contemplated a broad 35 border tax that couldnt that couldnt be further from anything he would possibly consider. Senator let me turn to another topic of tax policy. At leastying to gather a bit of information about how you would deal with some of these common tools that would be ifyour jurisdiction confirmed as treasury secretary. Inequality has grown substantially over the last 30 years. There has been bipartisan support in the past for the earned income tax credit. There are a number of proposals pending now in the congress. Do you have any thoughts on that . Mr. Mnuchin again, as i suggested to you when we met, i hope we can sit down and talk about taxes with democrats and republicans and see where we can agree on bipartisan solutions. I think as it relates to any specific component of this, i think we need to look at the overall tax reform that we are going to put through and where things fit in it. That i would welcome the opportunity to follow up with you and work on that. , and again, mnuchin i want to be respectful on this point. Because you have not been involved in these policy fields in the past and i respect that. Lots of leadership that a person can still provide. When i asked about medicare, you would be the managing trustee. You didnt really have thoughts on that. I just act ask you about the earned income tax credit. Mendous interest above among both parties. I gather you are not aware that the speaker has long been improvements that democrats are interested in. I will to you, i guess we will have the chance to go in some other questions i am very troubled that on these basic tools, that you would have if confirmed, you seem almost unscathed by the subject. So thank you, mr. Chairman. Mr. Mnuchin well, i am sorry that you are troubled by that. I hope i earned the respect that you arent troubled if i am confirmed. On the earned income tax credit, i dont want to comment on specific legislation on tax. I think the tax reform needs to be looked at as an overall policy, and i have laid out certain framework for what i believe the president elect believes in for tax reform without commenting on specifics. Senator i am over my time for this round. I hope, because i am interested with those discussions about tax reform, you are not talking about putting the in cap hased income tax credit has something you may throw in the trash can. If you do, you will have opposition from me and from the speaker of the house. Mr. Mnuchin i am not suggesting that. Im just saying i wasnt going into the specifics of every tax item. Thank you. Try toirman i want to cover three questions. The first is to return back to the discussion you were having with senator warner about fannie mae and Freddie Mac Gse reform, policy reform. Im sure you are aware that senator warren and i, and another number of senators on the Banking Committee have worked for it some time the banking legislation to deal with the circumstance. He currently have a situation in which fannie mae and freddie mac are in receivership. The federal government is basically running them, and the concern that i believe senator warner was referencing is a administratione not because we are afraid of anything, just because we are asking. We are trying to find out. Maycommit Administration Believe it is ok to keep them in receivership and run as is, the status quo, or perhaps to simply recapitalize them or put them back out into the market without any housing reforms. I just wanted to ask you if you would i realize you cant comment on a specific plan yet, but if you would comment on the fact as to if you think we need reform in our Housing Finance policies that would go further than simply recapitalizing fannie and freddie were keeping them in the receivership. Mr. Mnuchin again, thank you for that. Unlike the Medicare Fund where i a knowledge i am not an expert, on fannie mae and freddie mac, i think i am in next. I have been around these for years, i understand very well. That is why it would be one of my priorities to work with you. As i have said, what i am focused on is we need housing reform and a solution. I start with the standpoint that the status quo is not acceptable , of just leaving them there. I think as you know and we have discussed, or a two extremes on this. It is something i look forward to sitting down and talking you with. We need housing reform and need to make sure that whatever the outcome is, on the two extremes, that one, we dont put the taxpayers at risk and two, we dont eliminate capital for the housing markets. I am very concerned that middleincome people and moderateincome people who need Mortgage Loans have access to the capital. Senator i agree with you on both objectives and i think that is exactly what we need to Work Together to identify. Well i amn good, optimistic we can Work Together and hopefully figure out bipartisan solution. Senator my second question is you have already answered it but i want to raise it again because it is so important we have seen the unfortunate circumstance, in my opinion, in the last few years of the irs actually targeting individuals because of what they believe and how they advocate in our society. You have already talked about this, but i would just encourage you to make a high priority that not only the irs, but all of the federal functions under your jurisdiction as secretary of treasury, which i am sure you will be confirmed to be, are ofpped from that kind targeting of american citizens who are conducting perfectly Legal Business and engaging in perfectly free and legal speech. Mr. Mnuchin you have my 100 assurance that i will do that. I think there is no place in not only the treasury, other agencies for us to be having people act that way. You. Or all right, thank my last question this round would be back to the tax issue. One of the big issues that i think we must grapple with and would like your ideas on it, is i am sure as you know, a huge majority of the business entities in the United States a tax or the individual income side of the code, rather than the corporate side of the code. As we reform, as we should, our corporate code and engage in individual tax code reforms, i am concerned that we dont end betweenignificant business agencies in the United States as to tax burdens and tax rates that they pay. Mr. Mnuchin sure, and i too think that is an important issue. Again, for Large Companies that are in past reform today. The reason Large Companies are in past reform are because they compare it to the corporate rate. For many Large Companies that are structured as such, they will opt to take the business tax. We will find a simple, nonbureaucratic you check the box, you leave the money in the company, you grow your company, you get the lower business tax, you distributed out, you pay dividends. I think that is something that is critical. We will make sure we work with congress to make sure that we close loopholes so that rich people dont use this as a way and onlower business tax the other end, we make sure that Small Businesses are protected, as well. Legitimate Small Businesses. Businesses the small dont pay and incrementally higher tax just because they choose not to engage in the corporate form . Mr. Mnuchin correct. It is something we look forward to working with you on the details and how we can make sure that is preserved. Senator all right, thank you very much. Thank you, mr. Chairman. Mr. Chairman senator nelson. Senator thank you, mr. Chairman. You no doubt are that one of the things as treasury secretary you will have to face is the multiemployer are direunds that straits in dire straits. These are ones that have become table and they are ones Pension Plans for people like Truck Drivers and carpenters and minors. Miners. And the secretary treasury has the ability to reduce the pension benefits if the plan is projected to run out of money. Therein there are two bad outcomes. One, it is running out of money and you are going to be faced with the problem of what to do about it. Who are living on the edge and a reduction in the pension is going to mean something that they have to go without. What do you think about this and how would you approach this heart wrenching issue . I appreciate your concern and we had the opportunity to talk about this or that i believe your office followed up and sent me information on this. It is something i look forward to working with you on. Let me first say that i think that people who have worked very of time and built up a pension deserve to get their pension. That is very important. On the other hand, we have to be careful that on the other extreme, we dont have a bailout of the entire pension industry and bankrupt the guarantee fund. But i commit to work with your office, i understand these issues, i understand the sensitivity of these issues and share your concerns that cutting Truck Drivers pensions and other is a significant outcome and we should go to Great Lengths to figure out other solutions before we do that. Nelson since folks like you and me have been blessed, we havent often had to walk in the , who of folks like that are living on the edge. Mr. Mnuchin i completely understand. Thator nelson and i asked in your position with awesome authority as treasury secretary, that you put yourself in those shoes. Another financial disaster is what is happening in puerto rico , not only because of what they in at fault about, but also the unequal way that they have been treated by the law quirks in the long that i dont understand how the even got that way. They are not treated the same on bankruptcy laws, they are not treated the same on medicare and medicaid laws, and they have a situationly tragic where they were given block that medicaid money is running out this year, while at the same time, one third of the islands residents are and we knowh zika that 15 of those infected with pregnant,hey are there is a 15 chance that they will have a deformed child. I would like very much for you to keep that in mind, as we have got to come up with a plan. Now, i know a lot of responsibility is on us in the congress. The chairman led an effort and we tried to get some things past passed in december. But the big things like medicaid are coming up in the future. Mr. Mnuchin senator, first of all, thank you for going through that. When i did have the opportunity to meet with secretary lou and talk about certain issues that you wanted to advise me on and that he thought i would have to deal with in the future, puerto rico was high on that list. I must say, i wasnt an expert on puerto rico before the last 30 days. I started studying the issue. I share your concerns. I am glad that the commission was established. I understand that the treasury has been staffing the commission. I have someone who i am party asked internally who is going to be working with me to start working on and get debriefed by the treasury staff on this. This is going to be something that we need to figure out a bipartisan solution. I am hoping it can be done in the context of the commission, but i look forward to working with you on. Senator nelson thank you, mr. Chairman. Mr. Clinton senator menendez. Menendez i have listened to your responses to my , defending more than 50,000 foreclosures on your watch. I understand that you ought a bad book of loans. Were not saying that you had to save every single homeowner, but by taking the backstop, you had the obligation to at least try. Do you believe you made every effort to prevent foreclosures . I do. I actually brought with me, if you want to make part of the record, the fdic asked the inspecter general, the oig, to come in and look at the loan modification program. And they independently reviewed that. That was verified by the oig. I dont know if their determination is that you made every effort. Well make that part of the record. One of your Vice President actually admitting to robo signing 750 documents a week without reading or reviewing them. How can that be considered making every effort . Can you honestly say your bank made every effort to keep families and seniors in their homes when they were robo signing one document every 23 minutes . Senator, yes, i can absolutely say that we made every effort. And again, our loan modification programs were audited by the treasury, the fdic, the occ. You can imagine, being a private equity person who bought a bank, we lived in a glass house and we were constantly viewed by the regulatedors. Now, the comments that youre making, there was an industry issue which had nothing to do with Loan Modifications which had to do around the processing of foreclosures. That was a procedure that was mak. Ed at indy at the beginning of our ownership, we unfortunately didnt change certain procedures, as ive said. It was solved. Im worried about what your direction that your bank you keep referring to the entities. The office of thrift distribution hit you with a Consent Order because you were putting home owners on a fast track to foreclosures. That was part of that 750 a month. You also had an independent government audit in 2009 and 2010 that alone identified more than 10,000 home owners who were owed . 5 million in damages. And among those home owners were 54 incidents over the course of just two years where the bank violated the rights of active duty military servicemen and women, those defending our country across the globe, under the Service Members civil relief act. If you did all of that, how is it that you feel you can honestly say here in sworn testimony that your company did everything . So first of all, senator, and i appreciate the issue and as i said before we highly regret the extent that we made even one error, whether especially to the servicemen. And yes we had all those loans reviewed, we paid 8 million. Many, many firms paid billions and billions of dollars. But we regret any issue there. What youre referring to with the independent foreclosure review, it was one and the same. So as ive referenced in my testimony we were one of 14 banks that signed a Consent Order. Basically the 14 largest servicers signed Consent Orders. It was lay later taken over, and we were the only bank that actually completed that independent foreclosure review and we are proud of that. And the fact that it was completed at the end of the day ultimately showed that your company took people out of their homes and created consequences for them they should not have had. So im not sure which one is to be proud of. Do you know a woman named Sylvia Oliver . I do not. I didnt think so. She is from new jersey. She is the sister of the immediate past speaker of the new jersey general assembly. She received a loan from indy mac in 2008 and after her employer cut her hours, she had problems paying her mortgage. She tried eight times for a loan modification, which i believe she would have qualified. Every time, your bank denied each and every one. Shes been fighting to save her home for seven years. She nearly lost her home yesterday. Thanks to her tenacity she has a 30day reprieve. But thats no guarantee she wont lose her home next week. So i look at her i would like to have the testimony of seve